Saturday, January 09, 2010

There’s some buzz about a recent CNET article by Larry Downes claiming that the Obama administration is backing away from Net Neutrality.

Downes knits together a loose set of assumptions to make this case. And the usual suspects have amplified his argument as proof indisputable that Net Neutrality advocates are on the ropes.

It took Nancy Scola of The American Prospect to dig up dirt on Downes that CNET failed to disclose:

"[M]issing from Downes' scary op-ed on the Obama Administration's commitment to net neutrality: any mention that one of Downes' recent clients at the consulting firm Bell Mason Group is AT&T -- one of neutrality regulation's strongest opponents."

CNET, however, does list Downes as a "fellow at the Stanford Law School Center for Internet and Society."

Too many "scholars" live this sort of double life -- trading on academic credentials to lay a gloss of credibility over their telco-friendly arguments. It's up to news orgs (ahem… CNET) to disclose both sides of their personalities.

But let's put that aside for the moment and weigh Downes' case for what it's worth.

Open Internet = Real Recovery

Phone and cable company spokespeople have repeatedly asserted that Net Neutrality rules would thwart investment needed to bridge the digital divide. And that this in turn would result in the loss of jobs.

Downes follows this theme, writing that Net Neutrality is a "noisy side show" distracting from "the real priority for both the White House and the FCC: getting the country wired for recovery."

Claims that Net Neutrality will hurt investment and the economy are simply meant to distract attention from efforts by companies like AT&T, Verizon and Comcast to use their market power to thwart competition and reduce investment.

In a report released in October, Free Press actually looked at the market data (required disclosure by the SEC) and found no connection between Net Neutrality and capital expenditure in new networks.

The report finds that open Internet rules will likely have a positive impact on investment in both the network and applications markets -- which in turn has a positive impact on jobs.

"There is no doubt that without Net Neutrality, investment in the broader Internet applications and content markets will be substantially harmed," writes S. Derek Turner, Free Press research director and the report’s author.

Net Neutrality = Billions of Dollars in Value

NYU's Institute of Policy Integrity put an exclamation mark to Derek's point. In a report they released earlier this week, they find that Net Neutrality fosters an essential "open and entrepreneurial dynamic" that "creates billions of dollars in value for the American public."

The Institute calls for meaningful Net Neutrality rules to protect the real values of the Internet -- its openness to new ideas, innovation and entrepreneurship:

"At its heart, Net Neutrality regulation is about who will get more surplus from the Internet market. Enforcing Net Neutrality keeps the surplus in the hands of the content providers. Eliminating it transfers the surplus to ISPs."

Free Press’ own market-based analysis finds that such transfer of capital would likely result in padded profit margins for companies like AT&T and Comcast and not investment in a faster and more accessible Internet.

It's against these companies' interests to give us the Internet we want (a fast, open and accessible Internet that’s unfettered by gatekeepers).

And since the Internet is essential infrastructure for 21st century prosperity, regulation is needed to protect against abuses of market power that will harm our economy in the long run.

Downes was too busy conjuring conclusions that made AT&T happy to actually make sense of the facts.